Utilities flying under the radar đź‘€
Utilities could become an interesting contrarian opportunity again.
The Utilities sector’s Forward P/E is currently trading below its 5-year average. At a time when other areas of the equity market are attracting significantly more attention, we believe the sector may be worth a closer look.
In our view, Utilities could be particularly interesting from a contrarian perspective, while also fitting well as a defensive component within a broadly diversified portfolio. Relatively stable business models and less cyclical demand can provide an attractive counterbalance to more growth-oriented and cyclical exposures.
Of course, a more attractive sector valuation does not mean that every stock within the sector is cheap. Careful stock selection remains essential.
Nevertheless, we believe it can be especially worthwhile to take a closer look when a sector is not in the spotlight. These are often the periods when interesting contrarian opportunities can emerge.
What are your thoughts on the Utilities sector? Could it be an attractive defensive addition to a diversified portfolio?
This is not investment advice. #stocks